In its initial stage, Disney and the three Baby Bells hope to form a joint venture allowing the phone companies to deliver programming. That could draw on Disney's vast movie and TV library as well as new interactive offerings. Disney could also distribute other entertainment companies' programming, much as it does now on the Disney Channel.

But unlike that cable channel, sold by cable systems, there's a good chance Disney could sell the new video service directly to consumers, relying on partners to deliver the service.

"They've got the creative energy, the library of resources as well as the brand name to attract customers" to new interactive networks, said John Aronsohn, an analyst with the Yankee Group, a Boston consultancy.

Mr. Staggs said other phone companies or cable systems could be brought in as partners or licensees to distribute the service.

The venture would also develop a "navigator," or on-screen software, to move consumers through programming, conceivably using Disney characters.

A move into navigation software could pit Disney against numerous other companies-including Microsoft Corp., Apple Computer and Bell Atlantic Corp.-that are trying to create the interactive software standard.

But "it is possible that some of those companies" will be brought in as partners, Mr. Staggs said.

Despite the presence of the Bells and whistles like the navigator, Disney isn't shifting from Mr. Eisner's focus on programming.

While rivals like Time Warner are building interactive video networks, Disney is seeking alliances with technology companies as one more way to distribute content. That's not much different from the way Disney embraced such earlier new media as TV, cable, satellite, videotape, videogames and computer software, the latter through a recent venture with Microsoft.

"We're first and foremost a programming and entertainment company," Mr. Staggs said. "This is not fundamentally an investment in technology."

Mr. Eisner raised the possibility in the annual report last December that Disney would be "strategically affiliated" with computer, phone, cable and satellite companies.

"What we will not do is become an investor in technology as a sole means to an end," he wrote. "We will not stray from our commitment to content."

Disney's disclosure came as Mr. Eisner was just returning from what a spokesman referred to as a "hiatus"-quadruple heart bypass surgery in July.

"Part of what Disney has to do is show that it is continuing to move forward even in his recovery period," Mr. Seybold said.

Elsewhere at Disney, a theme park division spokesman said Leo Burnett USA, Chicago, is working on a project assignment "studying market segments."

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Bradley Johnson

Brad Johnson is Ad Age's director of data analytics and runs Ad Age Datacenter with colleague Kevin Brown. Johnson focuses on data and financial topics related to marketing, advertising and media. Johnson has held Ad Age posts in Chicago, Los Angeles and New York including editor at large, deputy editor, interactive editor, bureau chief and reporter.